Compensation Planning 2013-2014

1. Compensation Planning 2013-2014 Sherri Coxon Executive HR Consultant Business Sherpa Group

2. Highlights of the Data • Salary survey data obtained from the following sources: • AON • Conference Board of Canada • Hay Group • Mercer • MorneauShepell • Tech-Edge • Towers-Watson • WorldatWork

3. Highlights of the Data • Data provided for the following “cuts”: • Executive • Management • Professional • Office / Clerical / Technician • Trades / Production / Service • Data presented as follows: • Base Salary increases (%) • Salary Structure increases (%) • 2013 actual adjustments and 2014 forecasted adjustments • National • Local perspective where available

4. Highlights of the Data • Definitions • Base Salary % = the total amount of all increases combined • Merit + general salary increases • Salary structure % = the amount by which the established job rate is adjusted to reflect economic changes in the defined marketplace • Job rate defined as mid-point, control point, 100% or range maximum, dependent on structure

5. Highlights of the Data 2013 Actual Increases (National) • The base salary ranges are lower in almost every situation as compared to 2012, by as much as 0.5% in some situations • Salary structures similar to 2012 • Consistent range movement across all job types • Ranges for “local” (Ontario or Ottawa) data are broader than those for the National data

6. Highlights of the Data 2014 Forecasted Increases (National) • 2014 base salary projections indicate a high level of consistency between sources with very little change from the 2013 Projections • Structure adjustments are consistent to actuals for 2013 • Ranges for “local” (Ontario or Ottawa) data are broader than those for the National data • Greater decline in base salaries than in salary structures

7. The Gap is Widening • As organizations struggle with balancing limited budgets and the need to retain critical talent, they are segmenting their workforce and concentrating rewards on key and top employees - the gap between high-performing employees and those in the lower performing categories is widening significantly. • According to Mercer, in 2013: • Middle performers (60% of employees) received a 2.8% increase • Highest performers (6% of employees) received a 5.1% salary boost

8. Business Sherpa Group • Overview • A growing team of HR professionals who provide full spectrum HR services to small and medium sized companies • Flexible and fully scalable HR function for companies where no HR team exists; and where there is an HR team in place, we provide additional expertise and bench-strength for peak work periods or special projects • Team includes HR Executives, HR business partners and generalists, talent acquisition experts, compensation specialists, and training and development professionals • Our clients include high tech, commercial businesses, retail, manufacturing, construction, finance, professional services, not-for-profit and NGOs, and owner-operated businesses in Canada, US and internationally • Our goal is to help organizations realize their full potential by creating and delivering the very best and most relevant HR practices that add the greatest value possible • Our clients have full control over the level and duration of the engagement by leveraging scalable resourcing that address near term priorities and long term strategies

9. Compensation Challenges • Despite weak points in the economy, companies need to continue to offer pay increases to attract and retain employees • Only 2% of organizations are projecting wage freezes as compared to 3.6% for 2013 (Towers Perrin) • Key Challenges for our Clients: • Attraction and Retention of top talent • Being creative with a limited budget • Managing internal equity Issues • Recognizing top performers

10. “Other Comp” • Recognizing that money alone doesn’t drive employee engagement, we work with our clients to develop creative programs that employees value • Variable comp instead of, or in addition to, salary increases • Allows company to reward top performers • Self-funded Bonus Plan for ‘Not for Profits’ based on stretch objectives • Stock options • Additional time off • 1 week vacation (2% of salary), ‘x’ number of Personal days • Flex time or ability to work from home (1+ day/week) • Attendance at conferences or training programs • Provide key employees with an opportunity to work on a special “high profile” project or take on a new role (even if a lateral move) • Opportunity to work closely with management on business strategy and to be involved in key decisions • Purchase a meaningful gift for key employees

11. Employee Retention • Employers recognize that many of their employees are being paid below market, creating challenges for the business: • Increased Turnover Costs • Increased work load for others, potential lost revenue, recruitment costs for replacement, training costs, ramp-up time, impacts on employee morale, etc.) • Compression Issues • To compete for talent, employers are hiring new employees at market rate while long-term valued and committed employees remain below market • How to address this situation? • Be conscious when hiring outside talent – is there an opportunity to promote from within (succession planning) • Develop targeted ‘Pay for Performance’ program • Develop a budget for equity adjustments – find a way to fund it • Be more intentional about your Employee Engagement Strategy • Get connected with the “at risk” employees to understand and address other factors that could help off-set the cash compensation challenge

12. Comments / Questions?

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